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China in ‘communication’ amid report of Trump-Xi meet

Associated Press
Published 6:48 a.m. ET Oct. 12, 2018

In this Nov. 9, 2017, file photo, President Donald Trump, right, chats with Chinese President Xi Jinping during a welcome ceremony at the Great Hall of the People in Beijing. China said Oct. 12, 2018, it is in contact with the United States amid reports of a planned meeting between President Xi Jinping and President Donald Trump next month following a dive in the U.S. stock market blamed partly on a growing trade war between the world's two largest economies.(Photo: Andy Wong / AP)

Beijing – China said Friday it is in contact with the United States amid reports of a planned meeting between President Xi Jinping and President Donald Trump next month following a dive in the U.S. stock market blamed partly on a growing trade war between the world’s two largest economies.

Foreign ministry spokesman Lu Kang offered no specifics, but said that “I have also seen the relevant reports.”

“China and the U.S. maintain communication on dialogues and exchanges at all levels,” Lu told reporters at a daily briefing.

The reported meeting would take place during the G-20 summit in Argentina in late November.

The Wall Street Journal and the Washington Post both cited officials saying Trump has decided to proceed with the meeting with Xi. Trump’s top economic adviser, Larry Kudlow, told CNBC Thursday that, “There’s some movement toward” a meeting at the G-20.

“They have lots to talk about. So we’ll see,” Kudlow said.

Global indexes gained Friday after their recent sharp declines, on word of the possible presidential meeting, along with strong Chinese export data.

Japan’s Nikkei 225 index gained 0.5 percent to 22,694.66 after sinking early in the day and following a nearly 4 percent loss on Thursday.

Wall Street was set for an optimistic open after two days of steep losses. S&P 500 futures gained 0.8 percent to 2,766.80. Dow futures rose 0.8 percent to 25,378.00.

That followed a swoon that wiped more than 1,300 points from the Dow over two days and dragged the S&P 500 down more than 5 percent.

Reports that U.S. Treasury Secretary Steven Mnuchin has advised against labeling China as a currency manipulator – a status that could trigger penalties – were also seen as easing tensions.

Yet the prospects remain highly uncertain as to whether the U.S. is preparing to consider lifting penalty tariffs on about $250 billion of Chinese products, triggering retaliation by China.

The trade feud has been fueled by U.S. accusations that China coerces foreign companies into handing over technology in return for access to the Chinese market, as well as by China’s trade surplus with the U.S.

That surplus widened to a record $34.1 billion in September as exports to the American market rose 13 percent from a year earlier to $46.7 billion, down slightly from August’s 13.4 percent growth. Imports of American goods increased 9 percent to $12.6 billion, down from August’s 11.1 percent growth.

Chinese exports to the United States have at least temporarily defied forecasts they would weaken after being hit by punitive U.S. tariffs of up to 25 percent.

September marked the second straight record Chinese monthly trade surplus with the United States after August’s $31 billion.

Export numbers have been buoyed by producers rushing to fill orders before American tariffs rose, but they also benefit from “robust U.S. demand” and a weaker Chinese currency, which makes their goods cheaper abroad, Louis Kuijs of Oxford Economics said in a report.

The Chinese yuan has lost nearly 10 percent of its value against the U.S. dollar this year. That prompted suggestions Beijing might weaken the exchange rate to help exporters, but that might hurt China’s economy by encouraging an outflow of capital. The central bank has tightened controls on currency trading to head off further declines.

China-U.S. relations have also been roiled by Beijing’s heated objections to U.S. support for Taiwan, the self-governing island democracy it claims as its own territory, as well as China’s claim to virtually the entire South China Sea, where the U.S. says a Chinese destroyer came aggressively close to a U.S. Navy ship late last month, forcing it to maneuver to prevent a collision.

U.S. Vice President Mike Pence also accused Beijing last week of seeking to interfere in the U.S. midterm elections to be held next month.

Trump has made similar accusations, although security experts say they didn’t know of any Chinese influence operations comparable to Russian activities during the 2016 presidential election.